Soon-to-be ex-spouse lied on taxes
November 23, 2016 2:34 AM   Subscribe

I'm about a week away from having my divorce finalized, and I just learned that my ex lied on her separate tax returns.

We're in California and are a same-sex couple. We always filed separate tax returns. She did not submit her state returns with the financial disclosures we were required to share as part of the divorce process. I've been trying to get them for six months, and only ended up getting them because I refused to sign the final judgment paperwork, which would finalize the divorce, until I got the documents.

My lawyer finally obtained her tax returns, and I learned today that while I filed (correctly) as "married filing separately," my ex filed her CA tax returns as "single." Federal returns are not an issue, because our marriage was not legally recognized by the federal government/IRS during the years in question.

Did my ex benefit from filing as single, rather than "married filing separately"? Does that qualify as "cheating" on her taxes? Can it come back to bite me in any way?

And, please don't judge, but is her tax-filing lie something I can report to the Franchise Tax Board? Is this something they would even care about? (Note that the question is can I, not should I. I'm still thinking about the should part.)
posted by anonymous to Law & Government (3 answers total) 1 user marked this as a favorite
Did you sign her separate tax form? Then it can't come back to bite you.

Yes, you can report her. It won't help anything or anyone.
posted by Etrigan at 3:31 AM on November 23, 2016 [2 favorites]

According to the CA tax rate tables, the following items are exactly the same whether you are filing married separately, or single: (a) the Exemption Credit, (b) the exemption phaseout rate for high income earners, (c) the Standard Deduction, (d) the itemized deduction phaseout rate, and (e) the tax rates themselves.

So, technically a "lie" but there is no actual effect on taxes due.
posted by beagle at 3:51 AM on November 23, 2016 [3 favorites]

It seems to me like the Franchise Tax Board should have caught this error in advance, since when you filed separate, you had to put her SSN on your tax return, and this is the kind of discrepancy they check for. I wonder if they did catch it and corrected her returns, and that isn't captured in the documents she gave you.

If they didn't catch it, it could have benefited her in a few edge cases. If she had student loan interest, she may have been able to deduct it while filing single but not while Married/RDP Filing Separate. For FS returns, both parties must either take the standard deduction or itemize, so filing single could possibly benefit her if she has higher or lower deductions than you. She may have been able to qualify for the California EITC with a single return, which she could not qualify for if she is FS. Those are probably the three big ones, although there could be a couple more edge cases on the last page of this guide to Married/RDP Filing Separate in California. A tax professional would have to look at both her returns and your returns for the years in question to know if she owed any more taxes/penalties as a result of her incorrect filing status.
posted by muddgirl at 5:32 AM on November 23, 2016 [1 favorite]

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